Zambia copper, China woe

Big moves in Zambia are causing headaches in China. Senior Reporter Michael Turner writes.

In politics, making big moves at the start of a term can give voters time to forget about them when re-election comes around if they go wrong, or let you trumpet them as bold achievements if they go right. At least, that’s one way to explain the moves of Zambia’s new president, and former porter in London’s Victoria train station, Michael Sata.

At the start of October and only two weeks into his role, Sata put the brakes on the US$5.4mn sale of Finance Bank Africa to South Africa’s FirstRand and fired his central bank’s board. A handful of other government bureaucrats were also given the boot.

For exporters, the big shock came when the president suspended metal export permits from Africa’s largest copper producer. This suspension has now been lifted, but its legacy is still causing headaches.

On the face of it, there are only a few government intervention clauses that have been added, such as all exports must now be cleared by the central bank, officials told Reuters. Furthermore, there’s a chance that taxes might go up.

But there are other problems that look like they will take longer to go away. Sata was widely known for his strong rhetoric before election, earning him the nickname of King Cobra. A lot of this rhetoric was aimed at Chinese companies, with their US$2bn investment into Zambian mining, for behaviour that he saw as unfairly exploiting Zambian minerals and workers.

This idea has merit. For all of the investment into Zambia, around 60% of the population live in poverty with a disturbingly-high 37% considered in extreme poverty, according to the World Bank. This suggests that while some are making money from Zambia’s copper, it almost certainly isn’t Zambians.

China’s challenges grew after Sata said that foreign firms must do more to respect Zambian labour laws, reduce the number of expats in mines and improve working conditions.

Sata’s rhetoric seems to have rubbed off on his people; a spontaneous and non-unionised strike erupted at the Chinese-owned Chambishi copper mine on the Copperbelt, when Zambian miners demanded higher pay, no doubt buoyed by Sata’s words, even if not his direct consent.

President Sata is playing a dangerous game. It is right for a leader to want better for his people, but evoking non-negotiated strikes, even indirectly, is not the way to encourage continued investment from international sponsors.

Hopefully, being leader of the most copper-abundant country in a continent packed with underground goodies will be enough to make Chinese firms look past these hold ups and let Sata fight for the balance his country needs.
 

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